OPM finally gets rolling on a new retirement system

AT A GLANCE: Retirement's future

What: Defined benefits technology solution contract part of the Retirement Systems Modernization program

Type: 10-year performance-based contract

How much: $290 million

Awarded to: Hewitt Associates of Lincolnshire, Ill.

Scope: DBTS is the main cog of the RSM and will provide an online benefits services delivery model. It will include retirement administration services, data management, pension benefit calculations and pension payments.

Who can use it: All federal employees

Other aspects: OPM will soon award contracts for data imaging and conversion of paper records, and business transformation. The data imaging and conversation will take existing paper files for active employees and convert them into online records. The contract will be awarded this summer. The business transformation contract will train OPM employees to use the new system, and will be awarded in June.

It has been a long time coming, but the Office of Personnel Management seems to be on track to revolutionize how the government tracks, maintains and processes retirement information for its employees.

Under a $290 million contract award to Hewitt Associates of Lincolnshire, Ill., OPM expects that in about four years, federal workers will have the same experience in planning and altering their benefits and retirement profiles that most of their counterparts in the private sector have now'all online and at their fingertips.

'This contract is the centerpiece of our modernization effort,' said Lee Dettman, program director for OPM's Retirement Systems Modernization project. 'This will provide customer self-service for retirees and employees.'

New database

Under the deal, Hewitt will establish a Defined Benefits Technology Solutions database that will give federal workers, retirees and authorized agency officials open and immediate online access to retirement-related records and benefits elections.

OPM expects to fully complete the system, which includes the Defined Benefits Technology Solution and two other projects, by 2010, official said.

It will let employees view their working history and salary, calculate retirement benefits, and 'model' retirement benefits by projecting years of employment and future salary increases, giving them real-time information that helps them plan their eventual retirement.

This is simply not possible in the current system, Dettman said, and some employees find out too late if they've made any mistakes.

'In the new world, that information will be available centrally, on the Web, and will provide modeling and do a number of 'what if' scenarios,' Dettman said.Hewitt provides similar services to more than 300 private firms and 18 million employees. Company officials did not return repeated attempts for comment.

The contract is the biggest piece of OPM's Retirement Systems Modernization program. Right now, the agency stores retirement data for every federal worker dating back to the 1920s in more than 28,000 filing cabinets in a facility in Boyers, Pa.

The cabinets would reach more than 64 miles if lined up back-to-back, and when a federal employee wants to retire, OPM officials must sift through volumes of paper and calculate that employee's retirement benefit and pension package.

These calculations can take at least 30 days and are not always accurate, meaning that a retiree can be left waiting for weeks for accurate pension information.'This is a shameful way of doing business,' OPM director Linda Springer told the House Government Reform Subcommittee on the Federal Workforce and Agency Organization at a March 9 hearing.

OPM has been trying to modernize this system since the mid-1990s, and the effort has not been without its difficulties.

Between 1997 and 2001, OPM spent $12 million on planning and analyses on the project, and in February last year, the Government Accountability Office reported that the agency hadn't sufficiently developed management processes and had jeopardized the initiative's chances of meeting its cost and scheduled milestones.

OPM officials said the GAO report was a result of bad timing more than anything else, as the agency was in the middle of altering its approach to RSM.The agency started the second round of RSM planning by tapping consultant Booz Allen Hamilton of McLean, Va., to provide contract management services.

'To OPM's credit, they've addressed a number of our recommendations,' said David Powner, director of IT management issues at GAO and author of the February 2005 report.

GAO has had 'a very good working relationship with OPM since our report and I think they're headed in the right direction,' he added.

The Hewitt contract, while the centerpiece, is but one of three pieces that must be melded together.

A critical component is an imaging and conversion contract the agency expects to award this summer, Dettman said. This project will include collecting information from the existing paper files and converting it into data to be fed into the Hewitt system.

The other crucial piece is a business transformation contract OPM said will be awarded by June.

This contract is specifically geared to ensuring OPM employees are able to use the new system and have the necessary training and education to give employees retirement advice, Dettman said.

Merging the three units together and having sufficient buy-in from top executives such as Springer will ultimately decide RSM's fate, Powner said.

'To Springer's credit, there's an acknowledgment that the executives have been involved at this point and they must play a role in holding the contractors to key milestones,' Powner said.